Meeting demands of the premium

1 August 2012



Evan Williams, business development director north-west Europe for glassmaker O-I, charts how global factors are affecting trends in wine and spirits consumption


A ballooning world population, stagnant western economies and the rising middle classes in the BRIC nations. Economic power is shifting and, while most developed economies recover slowly from the economic downturn, demand for premium and luxury products is being fuelled by the rising middle class in developing nations.

It’s no different in the wine and spirits categories, where we observe continued premiumisation, as brand owners seek to counter an overall decline in alcohol consumption by developing higher margin premium and super-premium products.

Premium development

The developed world is drinking less. In January this year, trade show organiser Vinexpo predicted UK wine consumption 2011-15 to fall 4.3% as people “drink better and less”. As if to bear this out, UK retail sales of wine priced above £10 rose by around one third in volume for the year to the end of April, albeit from a low base, according to Nielsen figures released by the Wine & Spirits Trade Association.

Meanwhile emerging markets witness strong growth in international spirits brands and categories, such as vodka and blended Scotch, at the expense of cheaper local products. The global middle class is predicted to double from 1.8bn in 2010 to 3.6 billion in 2030 (Goldman Sachs), while relative per capita consumption of spirits is still small – so there is a big opportunity for spirits brands to extend their reach.

Some large-scale investments have recently been announced, including plans by global spirits giant Diageo for a £1 billion investment to increase its whisky production capacity by 40% over the next five years, with premium spirits producer Chivas Brothers (Pernod Ricard) set to invest £40m to meet growing demand for whisky in emerging markets.

Spirited choice

Glass is particularly well placed to support distillers and vintners in capitalising on these trends. Premium products generate three kinds of benefit for consumers: technical improvements (including new pack shapes and colours); functional enhancements (improved taste and renewed authenticity); and emotional cues (brand image). All are embodied and conveyed by glass above all other materials, as evidenced by O-I and FEVE (European Container Glass Federation) consumer research.

In a survey of European consumers by InSites for FEVE, published in 2009, 56% of Europeans said they chose glass because it preserves taste best, with 74% saying they would recommend glass as a better packaging material to family and friends. A 2011 survey for O-I in the US, published April 2011, revealed 85% of Americans said things “taste better” in glass, with 66% saying food and beverages in glass are “higher in quality”, and 90% saying glass is the “healthiest packaging option”.

Not that the industry is simply relying on material attributes: at O-I, R&D is of prime importance. Firstly, O-I drives product innovation for brand building. New colours, like the black glass (seen in Edrington Group’s The Black Grouse Alpha Edition whisky) and internal embossing provide distinctive visual effects. These breakthroughs excite customers to choose glass, which is why it remains the chosen packaging material for over 90% of spirits.

Other improvements ensure O-I can meet all this demand without harming the environment. O-I’s trade-marked Lean+Green initiative seeks to improve bottle weights throughout a whole range of price points – starting with the basics (wine bottles have been under 300g in continental Europe for years) but ensuring continued improvement with bottles for all qualities of wine and spirits.

These improvements play into the other significant trend, namely the rapidly growing importance of bulk shipped wine – not just in the UK but also in other major wine importing nations such as the USA and Germany. A survey by Rabobank indicates bulk wine imports in 2010 accounted for around 40% of the total wine market, up from 22% in 2001.

As these trends develop further, the glass industry will support its wine and spirits customers by improving the flexibility in its operations, constantly evolving to locate glassmaking capacity where customers need it most. In this vein, O-I upgraded its Alloa facility last year to improve supply to the Scotch whisky industry, and is now investing in new capacity for wine bottle production at its Harlow plant.


The Black Grouse Alpha Edition whisky uses O-I's black glass Black Grouse Evan Williams Evan Williams

Black Grouse Black Grouse
Evan Williams Evan Williams


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